EXHIBIT 10.J
KU ENERGY CORPORATION
ANNUAL PERFORMANCE INCENTIVE PLAN
PLAN DOCUMENT
January 1993
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KU ENERGY CORPORATION
ANNUAL PERFORMANCE INCENTIVE PLAN DOCUMENT
ARTICLE I - PLAN OBJECTIVES
The objectives of the Plan are to advance the interests of the
Company and its shareholders, by providing incentive
compensation opportunities that attract, retain and motivate a
select group of management or highly compensated employees:
1.1 By providing compensation opportunities which are
competitive with those of other utility holding
companies of comparable size, and
1.2 By motivating key executives to achieve annual business
goals and contribute to team performance by allowing
them to share in the risks and rewards of the business.
ARTICLE II - DEFINITIONS
For purposes of the Plan, the following definitions shall
control:
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2.1 "Affiliate" -- Any member of any controlled group of
corporations (as defined in Section 414(b) of the
Internal Revenue Code (the 'Code')) of which the
Employer is a member, any member of a group of trades
or businesses which are under common control (as
defined in Section 414(c) of the Code) of which the
Employer is a member, any member of an affiliated
service group (as defined in Section 414(m) of the
Code) of which the Employer is a member, and any other
organization deemed to be affiliated with the Employer
under Section 414(o) of the Code.
2.2 "Base Salary" -- Annualized base salary paid to a
Participant as of January 1st of each Plan Year or as
of such later date during a Plan Year as of which the
Executive becomes a Participant in the Plan, except
that if an Executive becomes a Participant as of a date
other than January 1st of a Plan Year, such amount
shall be prorated in proportion to the portion of the
Plan Year in which the Executive will be a Participant.
2.3 "Beneficiary" -- Any person or persons designated by a
Participant to receive amounts payable in accordance
with this Plan in the event of the Participant's death.
If no Beneficiary has been designated or if no
designated Beneficiary shall survive the Participant,
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the Participant's Beneficiary shall be deemed to be his
estate.
2.4 "Company" -- KU Energy Corporation, and successors
thereto.
2.5 "Committee" -- The Compensation Committee of the Board
of Directors of the Company.
2.6 "Disability" -- A physical or mental condition arising
after the effective date of this Plan which prevents a
Participant from engaging in any occupation or
employment for remuneration or profit, except for the
purpose of rehabilitation not incompatible with such
findings. The determination shall be made (i) on
medical evidence by a licensed physician assigned by
the Committee, or (ii) on evidence that the
Participant is eligible for disability benefits under
the Social Security Act in effect at the date of
disability. Disability shall exclude disabilities
arising from (a) intentionally self-inflicted injury
or self-induced illness; or (b) a proven unlawful act
or enterprise on the part of the Participant.
2.7 "Employer" -- The Company and any subsidiary or
affiliated entity to which the Plan is extended by the
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Board of Directors of the Company and which adopts the
Plan.
2.8 "Executive" -- Any management or highly compensated
employee of an Employer who is deemed by the Committee
to be eligible for participation in this Plan.
2.9 "Executive Optional Deferred Compensation Plan of KU
Energy Corporation" -- A special plan, as it may be
amended from time to time, designed to allow
Participants in this Plan to elect to defer Incentive
Award payments to a specified future date.
2.10 "Incentive Award" -- Awards made by the Committee under
this Plan. All awards will be paid in cash.
2.11 "Participation Form" -- The form that is prepared
annually for each Participant, which describes the
goals and award opportunities under this Plan, a sample
of which is attached hereto as Appendix A.
2.12 "Participant" -- An Executive of the Employer
designated by the Committee to participate in this
Plan.
2.13 "Plan" -- The Annual Performance Incentive Plan as
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adopted by the Company, as may be amended from time to
time.
2.14 "Plan Year" -- The Company's fiscal year.
2.15 "Retirement" -- Severance from employment with the
Employer and Affiliates at or after attaining fifty-
five (55) years of age and with not less than fifteen
(15) complete years of service with the Employer.
ARTICLE III - ADMINISTRATION OF THE PLAN
The Plan will be administered by the Committee. The Committee
is authorized to interpret the Plan and to establish and amend
rules and regulations necessary for Plan administration.
Decisions of the Committee shall be binding on all persons
claiming rights under the Plan. Recommendations as to the
operation and administration of the Plan, eligible employees
to participate in the Plan, type and amount of Incentive Awards
and performance criteria may be made by the management of the
Employer to the Committee. The Committee may employ such
counsel (who may be counsel for any Employer), consultants
and/or agents and may arrange for such services as it may
determine to be necessary or appropriate in the administration
of the Plan. All expenses incurred by the Committee in
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administering the Plan shall be paid by the Employers.
ARTICLE IV - DESCRIPTION OF THE PLAN
The Plan is a target incentive plan which provides for the
establishment of target, threshold and maximum levels of
individual Incentive Awards based on performance against
specific predetermined performance targets. Financial and cost
control measures will be established for each Plan Year,
individual goals may also be established for Participants each
Plan Year. Each year, management shall submit to the Committee
recommendations for the following Plan Year which shall
include: proposed Participants, target, threshold and maximum
award opportunities, performance targets for each performance
criterion (measure), and the weighting of the annual Incentive
Award among the performance criteria for each individual. From
time to time during a Plan Year management may also recommend
proposed additional Participants for such Plan Year and the
award opportunities and performance criteria for such
individuals. As soon as practicable after the end of the Plan
Year, each Participants Incentive Award will be determined
based on performance against the pre-established performance
targets.
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ARTICLE V - PARTICIPANTS
Participants will be selected by the Committee from among the
Executives of the Employers.
5.1 Awards under this Plan may be made only to Executives
who are in a position to make significant contributions
to the success of the Company.
5.2 Management shall recommend to the Committee those
Executives to be considered for Plan participation each
Plan Year. These recommendations are to be effective
only after they have been approved by the Committee.
ARTICLE VI - AWARD LEVELS
6.1 At the time Executives are selected as Participants in
the Plan, management of the Company shall recommend to
the Committee the target annual Incentive Award
opportunity, expressed as a percentage of the
Participant's Base Salary.
6.2 The achievement of threshold performance earns no
award, maximum performance earns 1.5 times the target
award opportunity. Awards for performance between
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threshold and target performance, and target and
maximum performance will be determined by straight-line
interpolation.
ARTICLE VII - PERFORMANCE CRITERIA AND PERFORMANCE GOALS
Prior to the beginning of each Plan Year (or as soon as
possible after the Plan is adopted in the case of the 1993 Plan
Year or after an Executive is added as a Participant during a
Plan Year), management shall recommend to the Committee
threshold, target, and maximum performance goals for each
performance criterion defined below applicable to each
Participant. The Committee shall determine, based on
management's recommendation, the weighting of each performance
criterion, as it applies to each Participant.
The following performance criteria are applicable to the Plan:
7.1 Cost Control Criterion
The level of expenses of some or all of the Company's
businesses identified by the Committee as compared to a
targeted level of expenses set by the Committee.
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7.2 Shareholder Criterion
Actual net income available to common shareholders as a
percentage of targeted net income available to common
shareholders.
7.3 Individual Criterion
Individual performance objectives (typically one to
three goals) may be established for each Participant.
These objectives shall relate to and support the
strategic and/or operating objectives of the Company.
7.4 The Committee may adjust the threshold, target, and
maximum performance goals for each performance
criterion at any time during a Plan Year to reflect any
extraordinarily unusual occurrence which is outside the
control of management and/or any Participant, which
occurrence has a significant impact on the Company.
ARTICLE VIII - COMMUNICATION OF THE PLAN
After performance targets are established as described above,
management shall advise each Participant of these targets and
his award opportunities under the Plan. This communication
will take place each Plan Year via an individual employee
Participation Form (Appendix A).
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ARTICLE IX - PAYMENT OF AWARDS
Incentive Awards shall be payable in cash as soon as feasible
after the close of the Plan Year as determined by the
Committee.
9.1 In the event of termination of employment with the
Employer and Affiliates during a Plan Year by reason of
Retirement, Disability or death of the Participant, the
Participant, in the case of Disability or Retirement,
or the Participant's Beneficiary, in the case of the
Participant's death, shall earn an Incentive Award
based on actual salary earned prior to termination
during the Plan Year, and actual performance against
established targets. The transfer of employment from
the Employer to an Affiliate during a Plan Year shall
not be deemed a termination of employment for purposes
of the Plan.
9.2 In the event of termination of employment with the
Employer and Affiliates during a Plan Year for any
other reason, participation in the Plan will be
terminated and no award will be payable to the
terminated Participant.
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9.3 If the Participant's employment with the Employer and
Affiliates is terminated after the end of the Plan
Year, but prior to receipt of the corresponding
Incentive Award, the Participant, or the Participant's
Beneficiary in the case of the Participant's death,
shall be paid the full Incentive Award at the time the
other Participants' Incentive Awards are paid unless
termination is the result of gross negligence or
malfeasance as determined by the Committee in which
case no award will be paid.
9.4 Notwithstanding any provision of the Plan, the Chief
Executive Officer of the Company, in his sole
discretion, may limit or eliminate any Participant's
participation in the Plan, provided such limitation or
elimination occurs prior to date the award would
otherwise be paid to the Participant.
ARTICLE X - DEFERRAL OF INCENTIVE AWARD PAYMENT
Subject to all of the provisions of the Executive Optional
Deferred Compensation Plan of KU Energy Corporation a
Participant may validly elect to defer all or part of any
Incentive Award which may be payable to the Participant under
this Plan. Such election however, shall not apply to all or
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any part of an Incentive Award payable for a Plan Year in the
event of the Participant's death prior to the time other
Participants' Incentive Awards for that Plan Year are paid.
ARTICLE XI - EFFECTIVE DATE OF THE PLAN
The Plan shall be effective for the Plan Year commencing
January 1, 1993, and may be terminated, amended, modified or
supplemented at any time by the Company.
ARTICLE XII - MISCELLANEOUS PROVISIONS
12.1 By acceptance of any Incentive Award under the Plan,
each Participant agrees that benefit calculations under
all other plans of the Employer will exclude, unless
otherwise expressly provided in any such plan, the
Incentive Awards under the Plan.
12.2 The designation as a Participant in the Plan and the
receipt of an Incentive Award under the Plan shall not
give the Participant any right to continued employment
or the right to receive an Incentive Award under the
Plan in a subsequent year.
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12.3 Except as required by law, no right of the Participant
or designated Beneficiary to receive payments under
this Plan shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation or to execution,
attachment, levy or similar process or assignment by
operation of law and any attempt, voluntary or
involuntary, to effect any such action shall be null
and void and of no effect.
12.4 Any words herein used in the masculine shall be read
and construed in the feminine where appropriate. Words
in the singular shall be read and construed as though
used in the plural in all cases where the context so
requires.
12.5 This Plan shall be construed under the laws of the
Commonwealth of Kentucky.
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IN WITNESS THEREOF, the Company has caused this Plan to be
executed by its duly authorized officers as of this
19th day of February, 1993.
WITNESSES: KU ENERGY CORPORATION
/s/ Janice Houp By: /s/ John T. Newton
President
/s/ Nora Bentley Attest: /s/ George S. Brooks, II
Secretary
(SEAL)
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APPENDIX A
KU ENERGY CORPORATION
ANNUAL PERFORMANCE INCENTIVE PLAN
Participation Form for Plan Year Commencing ___________
_______________________________________________________________
_______________________________________________________________
PARTICIPANT____________________________________________________
TARGET AWARD OPPORTUNITY: ________% of Base Salary
or $_________________________________
MAXIMUM AWARD OPPORTUNITY EQUALS $_______________________ x 1.5
or $_____________________________
APPLICABLE PERFORMANCE CRITERIA AND WEIGHTING:
A. Cost Control ________%
B. Net Income ________%
C. Individual Goals (as applicable) ________%
(i) ____________________________ __________%
(ii) ____________________________ __________%
(iii) ____________________________ __________%
100%
100%
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PERFORMANCE TARGETS FOR 19_____
AND
AMOUNT EACH WILL EARN
_________________________________________________________________
_________________________________________________________________
Performance % Base Salary Dollars
Criterion Levels Earned Earned
A. Cost Control Threshold $______ _____________ _______
Target $______ _____________ _______
Maximum $______ _____________ _______
B. Net Income Threshold $______ _____________ _______
Target $______ _____________ _______
Maximum $______ _____________ _______
C. Individual
Goals Missed _____________ _______
Slightly Missed _____________ _______
Fully Achieved _____________ _______
Exceeded _____________ _______
Far Exceeded _____________ _______
Dollars earned at Target Perfromance: $__________
Dollars earned at Maximum Performance: $__________
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ANNUAL PERFORMANCE INCENTIVE PLAN
OF
KU ENERGY CORPORATION
BENEFICIARY DESIGNATION FORM
This election is in accordance with the provisions of the
Annual Performance Incentive Plan (the Plan) of KU Energy
Corporation (the Company) and is made this ________ day of
________________, 19_____, by __________________________
(the Executive).
I hereby designate the person or persons below as beneficiary
or beneficiaries to receive any benefits that may become
payable under the Plan on account of my death. I hereby revoke
any previous designations of beneficiaries under the Plan and I
understand that I may make future changes.
(Designate beneficiaries by given name, i.e., Mary J. Jones,
rather than Mrs. John Jones.)
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PRIMARY BENEFICIARIES
Name Relationship Share (%)
_____________________________ ___________________ ___________
_____________________________ ___________________ ___________
_____________________________ ___________________ ___________
_____________________________ ___________________ ___________
If I have designated above more than one primary beneficiary,
payment of my benefits shall be made to the primary
beneficiaries surviving me in the Share Percentage indicated;
provided, however, if any primary beneficiary shall not survive
me or shall die prior to distribution, the undistributed share
allocated to such primary beneficiary shall be paid to the
primary beneficiaries who do survive (pro-rated if more than
one survives based on the Share Percentage allocated to each
surviving beneficiary).
CONTINGENT BENEFICIARIES
Name Relationship Share (%)
_____________________________ ___________________ ___________
_____________________________ ___________________ ___________
_____________________________ ___________________ ___________
_____________________________ ___________________ ___________
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If I have designated above more than one contingent
beneficiary, payment of my benefits shall be made to the
contingent beneficiaries surviving the last to die of me and my
primary beneficiaries in the Share Percentage indicated;
provided, however, if any contingent beneficiary shall not
survive the last to die of me and my primary beneficiaries or
shall die prior to distribution, the undistributed share
allocated to such contingent beneficiary shall be paid to the
contingent beneficiaries who do survive (pro-rated if more than
one survives based on the Share Percentage allocated to each
surviving contingent beneficiary).
IN WITNESS WHEREOF, I hereunto set my hand as of the
date first above written.
______________________________ ______________________________
(Witness) (Executive)
Received and accepted on behalf of the Compensation Committee
of the Board of Directors of KU Energy Corporation.
KU ENERGY CORPORATION
Dated _______________________ By ___________________________
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